Second charge challenges will make sector stronger – Crewe

by: Paul Crewe, managing director of Smart Money

The editor of Specialist Lending Solutions recently posed a very apt question - Why so many column inches on second charge?

The article behind the question really helped to highlight not only where the regulatory microscope is currently being placed but also, despite its still relatively small stature in terms of lending volume, how important second charge is within the wider lending community.

So are these column inches justified or not? And do we really want or need them?

Much ado about nothing?

As someone who has worked in and around this sector for more years than I’d care to share, it’s always been noticeable how passionate and vocal a variety of people have been when championing the merits of second charge and their input in helping to raise its profile.

However, historically speaking at least, a decent chunk of these column inches were not always the most positive – although not without good reason.

Looking from the outside-in, it might seem like there is much ado about nothing. As pointed out in the aforementioned article it is ‘only’ a £1bn industry after all.

Even from an intermediary point of view, seconds have largely sat in the background of their day-to-day practices for a decent chunk of their business lives and even now still do not account for enough of their attention as they could, or possibly should.

Legacy issues also remain relating to some untoward past practices.

The current attention being paid to the sector could be seen as yet another dark cloud, but I do not think this is wholly fair.

Raise standards, boost confidence

There were many fears leading up the implementation of the Mortgage Credit Directive (MCD), although these soon transitioned into the lauding of increased professionalism throughout the sector and improved consumer perception.

In six to 12 months I believe we will be saying similar things after this bout of regulatory attention and subsequent media focus.

After all, anything which helps continue to raise standards has to be a good thing for borrowers and for the future wellbeing of this particular marketplace.

Not to mention helping to bolster intermediary confidence and interaction.

At times like these it’s important to remember, and reiterate, just how far we have come as a sector in such a relatively short space of time.

And we should not let the current FCA spotlight blind intermediaries in terms of how vital it is to incorporate seconds into their advice process.

Almost unrecognisable

That’s not to say the second charge sector is perfect. There is still much work to be done to provide greater transparency across the board and ensure robust measures are in place so that offerings remain fair and responsible at all times.

However, if we think back to three, five or even 10 years ago – generally speaking – lending processes, service standards and the number and variety of product offerings are almost unrecognisable.

New entrants are building propositions in the right way to continue this forward momentum, while also serving to challenge established players to up their games – factors which have resulted in a hugely positive impact on rates and criteria.

These are the types of messages which we need to be reminding intermediaries and borrowers of. We can’t ignore just how difficult the past few months have been, or how challenging the next few months will be, but these will only make the sector even stronger over the longer term and hopefully result in a deluge of overwhelmingly positive column inches in the future.

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